0:04

We're still in the same house that we bought when

0:07

we first got married. It was supposed to be

0:09

a starter house. And here we

0:11

are 13 years later, still in the same

0:13

house, still in the middle of renovating it.

0:16

I thought we would be done with renovations.

0:18

I thought we would be not living

0:21

paycheck to paycheck. We

0:23

couldn't save $1,000, which is

0:26

pathetic, but we needed the money. I would

0:28

save $100 and something would come up or

0:30

$50 and something else would come up again.

0:35

We could never get past that step. I

0:37

failed our, I

0:40

wouldn't say our marriage, but I failed

0:43

to provide us a life

0:46

that we deserve. Technically, we've made

0:48

it. We're making way

0:50

more than we made when we first got married,

0:53

but we're still in the same place that we

0:55

were 13 years ago, but

0:57

worse. Meet

1:03

Elizabeth and John. They're

1:05

in their mid thirties. They've married for

1:07

13 years with an eight year old

1:09

daughter and they spend way too much.

1:12

They're stuck. They're in debt. They

1:15

admit to being impulsive with their money,

1:18

but they can't figure out what to do to

1:20

make a change. They told

1:22

me in their application that they have a

1:24

10 out of 10 problem and

1:26

that within one year they're going to reach a breaking

1:28

point. But when I

1:30

talk to them, I'm surprised

1:32

at how casual they sound

1:35

about the severity of their situation. Listen

1:40

in as you meet Elizabeth and John. For

1:46

me, Christmas is a huge thing. We're

1:48

huge on giving gifts. We're

1:50

huge on family. We're huge on food. And

1:54

usually Christmas is the time where we

1:56

are Overly

1:58

strapped. We overspend. We

2:00

want to give the best gifts for our daughter.

2:03

Oh, she's our only child. Very

2:05

obviously very special to Ashes

2:07

are Miracle Baby. So.

2:09

We love to spoil her, willing to give

2:11

her from everything she's asking. For that

2:14

usually requires us borrowing

2:16

against every little thing

2:18

we can possibly borrow

2:20

against a good. Ah

2:23

we views v like

2:25

prepay asked like Florida

2:28

and. That all there's the

2:30

whole bunch of them. Were. You you.

2:33

Pay in increments. kind of like your

2:35

credit card, but not really. You're still

2:37

charge interest rate and it's like payments

2:39

and for payments and six months so

2:41

we are used. Those apps basically.

2:44

To find our Christmas this year?

2:46

Or did you get your daughter?

2:48

Fergus? Her

2:51

big gift was a ride on

2:53

pony. I was like five hundred

2:55

dollars so for us that was

2:58

like a huge a minute spend.

3:00

This is one ride on a

3:02

bony. No. No,

3:04

sorry it is a toy he did you

3:06

ride on it. Was okay, like a

3:08

hover board and a pony. Put.

3:10

Together. A Big is a five

3:12

hundred dollar. Only. Hover

3:15

board. I said. That. Pretty

3:17

big sister and we're going on our living

3:19

room right now. There's no place to put

3:21

it. So yeah, like any good, she had

3:23

a big lifts. And. We

3:25

could have bought her. Any

3:29

number of other things off of a. And

3:32

she the been just as happy about it than

3:34

the bony. When. I asked about did

3:36

we really need to spend five hundred dollars

3:39

on a bony. It was.

3:41

I'll make it work. And

3:43

I felt pushed aside. Because.

3:47

What I said just didn't seem to matter.

3:50

How did you decide the financial

3:52

part of that purchase? Like.

3:55

Did you say. Oh, this is how

3:57

much we can afford. Or was it more like. She

4:00

wants this and so we're going to find

4:02

a way to get her that. More

4:04

that, yes. More, I will find a way. I

4:06

will make it work. How did you make it

4:08

work? By

4:10

borrowing against money that I didn't have. Yeah,

4:13

once January rolled around, the payments started

4:15

coming in. And

4:17

once those payments started hitting, I realized

4:20

we couldn't afford those payments, utilities,

4:23

house payments, car payments, all of

4:26

that in one month. So

4:28

then I have a nice

4:31

little system where I'll pay

4:33

this this month, not that, and

4:35

then catch up when I can,

4:37

wherever I can save a few bucks.

4:40

So I have this wonderful, I'll show

4:42

you, little

4:45

diary that I write everything down

4:47

within a two week period that our

4:49

paycheck covers, the bills that are due

4:51

within those two weeks. And

4:55

I just keep track and

4:57

hopefully by the, you

4:59

know, right now we're $200 away from paying off

5:02

Christmas and it's February. If

5:05

you were to describe how that notepad makes you

5:07

feel, what words would you use? Oh,

5:11

anxious for sure. Sad,

5:14

because I have to use it. I

5:17

would say doubly sad because it's

5:19

been going on for so long. We

5:23

started this when we got

5:25

married and I haven't seen

5:27

the end of it. Like I thought this was kind

5:29

of be a stopgap

5:31

for when we started making more money,

5:33

you know, because when we first got

5:36

married, we were dirt poor. We

5:38

were making minimum wage. We had just bought

5:40

a house. We just paid

5:43

for the wedding out of pocket between

5:45

the two of us making no money. We couldn't

5:48

afford to go on a honeymoon. We couldn't afford

5:50

to take vacation days, you know, married

5:52

young and poor. So

5:55

I thought surely by the time we

5:57

get to, you know, our thirties, things would

5:59

be good. be great. And obviously it's

6:01

continued on and on. And here

6:03

we are, you know, in

6:05

our late thirties. It's the same process.

6:09

John, what do you think

6:11

hearing Elizabeth describe the notebook

6:13

and how she manages one

6:16

account to another every single month? It's,

6:18

it's a bit chaotic to me. I've

6:21

always been the more structured person, you

6:23

know, I may not pay the bill

6:26

on time, but it's getting paid this month.

6:28

I would give up luxuries

6:31

or other things to make sure

6:33

that like the electric bill or the gas bill

6:35

or the house payment was paid. It makes

6:38

me sad to see

6:40

how, how much that book

6:42

just beats her down because there's

6:45

times in the book where it'll look like

6:47

we're going to, we're going to finally start

6:49

to outpace it and get ahead.

6:52

But then life and it's funny way, you

6:54

know, comes up and kicks dirt in

6:56

your eye. And you know, we've gotten

7:00

just about there to start outpacing

7:02

it and then we fall

7:04

back into where we were at

7:07

and fall right back into the rut. What

7:10

is your role in the finances in

7:13

your family? All

7:15

support. I started out

7:18

with being the one paying

7:20

the bills because of

7:23

the way that I handled

7:25

money. Our spending

7:28

tendencies started to get away from us and

7:30

it started to frustrate me.

7:33

And so we started to split

7:35

the bills. We started

7:37

to fall into the position then where

7:40

we would get paid and one

7:42

of us would pay all of our bills

7:45

because we got paid. But

7:47

then the other person didn't have money to

7:49

pay their bills that were due because we

7:51

weren't, we weren't really talking about who needed

7:53

to pay what and when our communication

7:55

was just non-existent about what needed

7:57

to be paid. Elizabeth

8:00

said, you know, I'll take it all. Just

8:02

give it to me. I will start doing it.

8:04

And that's when the book started. 10,

8:07

12 years ago. Is

8:09

that correct? Yeah. Yeah. Probably about

8:11

10, 12 years ago. I'd ask questions.

8:13

If we were gonna go do something, I would say,

8:15

you know, hey, are you sure we

8:17

have money to go do this? What

8:19

would she say? The phrase that I

8:21

feared the most, I'll make it work. He

8:24

doesn't see the numbers every day. Like

8:26

I wake up and check

8:29

everything, I'll make

8:31

it work. And when did you stop asking that

8:33

question, John? I never stopped asking. Did you ask

8:35

it about that pony? Oh

8:38

yeah. Okay. What'd she say? I'll make

8:40

it work. Is she making it work? Are

8:47

you making it work? We're

8:52

still here, but no. The

8:55

big clue here is a lot of chaos.

8:58

Chaos in the way that she manages money, chaos

9:00

in the way that they make

9:02

decisions about money, even physical chaos

9:04

in having a huge toy pony

9:07

in the middle of their living room. When you

9:09

think of your money, it's very

9:11

common for people to say overwhelmed or

9:13

reactive, both of which

9:16

are trouble signs. I'd

9:18

like for you to think about something in your life where

9:20

you're really good at it. Might

9:22

be your workouts, your cooking, your job. How

9:24

would you describe yourself? Maybe

9:27

confident, maybe competent,

9:30

maybe calm, relaxed. When

9:33

it comes to your money, think about the

9:35

way that you describe yourself today and

9:37

think about what you might like to describe yourself

9:39

as. For me, the ideal words

9:41

with money might be calm,

9:43

cool, collected, present, safe,

9:46

future focused, even

9:49

indulgent, luxurious, and

9:51

prudent. You choose,

9:54

but I want you to notice what it sounds

9:56

like to be in control of your money. It's

9:59

not this. Yes. We'll

10:02

be right back. And

10:04

I recently took a guys trip to Wyoming. We're

10:06

staying at a ranch, and it would have

10:09

been easy for us to sit around, play

10:11

cards, and drink all day, and then come home.

10:14

But I wanted to make this

10:16

a trip full of unforgettable experiences.

10:19

So we took the time to map it out, and

10:21

we ended up going snowmobiling. We

10:23

ended up going horseback riding in

10:26

the snow. We ended up taking

10:28

a behind the scenes tour of

10:30

this massive wine cellar that they

10:32

have, seeing all their

10:34

private spirits and liquors that

10:37

we normally would have never even known about. And

10:40

this is the benefit of creating

10:42

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10:44

forget. Well, one thing I wanna

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13:09

Now, back to Elizabeth and John. I

13:12

don't have any guidelines in the way that I do

13:14

the finance, I guess. I don't have any guardrails.

13:16

I just kind of, whatever

13:18

I can make work, I

13:20

can make work. What do

13:22

you mean make work, though? It's not working. It's

13:25

not working, no. But whatever

13:27

I can pay with what money I have, I pay.

13:29

And if I don't have the money, I borrow. So

13:32

can you say that to me in a complete

13:34

sentence? Because it's not working and it's not the

13:37

money you have. So how do you decide

13:39

if you're gonna buy something? Complete

13:42

impulse. It's, I

13:44

want it, I buy it. Thank you. Now

13:48

we can work with that. Yep. Okay.

13:51

Are you in a better or worse financial situation

13:54

than when you first got married? Worse.

13:58

Because? We're in debt. What

14:01

was the first thing you got into

14:04

that house and

14:06

then car

14:09

or truck? I should say I know

14:11

your feelings on trucks. What

14:14

are my feelings on trucks? It's just an F one 50.

14:16

Oh, just F one 50. All right. You

14:18

need it. You need that. It was used.

14:22

I will use it was used within faithful

14:24

price. Yeah. Uh huh.

14:27

But at the time we probably couldn't afford

14:30

the car payments anyways, but we needed a

14:32

second vehicle and that's what he picked.

14:34

So I needed

14:36

the four wheel drive. Why I

14:39

work in maintenance at

14:41

a retirement community and I need to

14:43

be able. It was during

14:45

the winter. If we get

14:47

like a lot of snow around here, I still

14:50

need to be able to get into the facility

14:52

to clear the parking lot and

14:54

stuff like that. He's also, I will,

14:56

I will give him the benefit of the doubt

14:58

here. He does also have to, when

15:00

other people are snow bound, it is his

15:02

responsibility to go out and pick them up

15:04

because of his job. Because

15:07

of his job. Yes. That

15:09

it falls on the maintenance crew to go

15:13

collect people when they're stuck. Does the company

15:15

pay for that? No.

15:19

On company time. Yeah. But

15:22

they don't pay for the vehicle. He just told them like I

15:25

have that little car. What would they say? I

15:27

don't know. That's a good question. I don't know.

15:30

That's never really come up. It never

15:32

hurts you, right? No. No. I

15:35

need to cut in here. That was a major,

15:37

major clue. Did you catch it? Elizabeth

15:39

and Jonathan just calmly told me

15:41

that he needed a truck, which

15:44

they admit he couldn't afford because

15:46

he has to clean the roads and

15:48

pick up stranded people at work. But

15:51

it literally never occurred to them

15:54

that their job should

15:56

pay for this. This is very common among

15:58

people who grew up poor. work

16:00

in low-wage industries. Basically jobs where

16:02

employees don't have a lot of

16:04

power. The invisible script here

16:07

is, the job tells me what to

16:09

do, and I do

16:11

it. That is the power dynamic. But

16:14

in industries where employees have a lot

16:16

of power, and among communities

16:18

where there's a lot of agency, this

16:21

would never happen. For example, if this

16:23

interview were held in San Mateo, and

16:25

I were interviewing for the job, I

16:28

would literally say, well, I expect you'll

16:30

be providing a work vehicle. And

16:32

they would. Already,

16:34

we can see how they view the world

16:37

profoundly differently. There's

16:39

a lot of passivity, a lot of accepting

16:41

that that's just the way it is. And

16:44

one of my dreams with my book and

16:46

my podcast and my show is to

16:49

show you that you have power

16:52

to change the situation that you are in.

16:55

What's the status today? When do you talk

16:57

about money? I show them my

16:59

little notebook and I show them what

17:01

bills we have due within that two

17:03

weeks. I show him

17:05

which ones we can afford to pay.

17:07

And I show him which ones are getting

17:09

bumped. And what does he say? And

17:12

why? And he says, usually he just

17:15

says, okay. When

17:17

you are going through the process of showing him, what

17:20

are you really trying to accomplish there? I'm

17:23

trying to engage him maybe a

17:25

little more with the finances to

17:28

prove that what I'm doing is

17:30

correct. But no, no,

17:32

he doesn't. He just says, okay. And that's usually

17:35

the end of it.

17:37

Can I tell you, I love talking about rich

17:39

life and personal finance stuff. Even

17:42

I would not be engaged by that. Yeah,

17:45

why not? But I

17:47

did think you were pretty perceptive there.

17:50

But the second thing you said, the way

17:52

that I'm trying to prove to him that

17:54

what I'm doing is right. Yeah.

17:58

Yeah. Because if you were doing it

18:00

wrong, what would that mean? I

18:04

would hope that he would point it out and correct

18:07

it or help give me a better idea of what

18:09

to do. When was the last time he's done that?

18:13

Never. So can I ask again,

18:15

if you were doing your

18:17

finances wrong, what

18:20

would that mean to you? I

18:24

have that

18:27

I'm responsible for putting us in the position that we are

18:29

now. I'm the

18:31

reason we're in debt. I'm the reason

18:33

that we can't pay our

18:36

bills because it's all on me.

18:40

I've failed our, I

18:42

don't know, say our marriage,

18:45

but I've failed to provide

18:47

us a life that we deserve. What

18:51

does that mean, deserve? You

18:56

know, we bought this, we're still in the same house

18:58

that we bought when we got

19:00

first got married. And when

19:03

we bought the house, it was supposed to be a starter

19:05

house. And here we are 13 years

19:07

later, going the same house, bill

19:09

in the middle of renovating it. None

19:11

of the renovations are done. I

19:14

thought we would be in a nicer place.

19:16

I thought we would be done with renovation.

19:19

I thought we would be not living

19:21

paycheck to paycheck. Technically

19:24

we've made it. We're making way

19:26

more than we made when we first got married,

19:29

but we haven't. We're still in the

19:31

same place that we were 13 years ago,

19:35

but worse actually, because

19:37

we're so much in debt. So

19:41

it feels counterintuitive to what I

19:43

thought we would be, where I

19:45

thought we would be. Yeah,

19:48

we're going to have money to be able to what?

19:51

Tell me. Go on

19:53

a vacation on a moon. We've never

19:55

done that ever. What else?

19:57

Tell me. Honestly,

19:59

I don't know. I don't think we've dreamed

20:01

past vacation as far as

20:03

money goes because we're so in debt. I'm

20:06

with her on it. I mean, I would have thought

20:09

since we both started out making

20:11

minimum wage and all we had

20:13

to worry about was making

20:16

sure the utilities were paid. We had gas in

20:18

the cars and our

20:21

home. We're making considerably

20:24

more than we'd made then, but

20:27

we find ourselves in

20:31

the same circumstances, I wouldn't

20:34

have necessarily said that we deserve to

20:36

be better off, but I would have

20:38

hoped that we would have been

20:41

in a better position to just enjoy

20:44

the simpler things. There's a

20:47

recurring theme on this podcast where people

20:49

say what they deserve. And

20:51

usually it's them describing things they

20:53

want. A truck, an expensive

20:55

mattress, all kinds of stuff for their kids.

20:58

I think you deserve to have a good

21:00

education, health care, a safe place to live,

21:03

which is why I vote for progressive

21:05

politicians who want to build more housing

21:07

and expand access to public education and

21:10

health care. But too

21:12

many of us have twisted the concept

21:14

of deserving into random desires,

21:16

which are coincidentally the very same things

21:18

we see advertised all over TV and

21:20

social media. Is it any wonder that

21:23

American consumers love to spend

21:25

the majority of their money and they have

21:27

very low savings rates? Personally,

21:29

I would like you to banish

21:32

the word deserve from your

21:34

vocabulary when it comes to money. You

21:36

and I can set big ambitious goals, but

21:39

if we want something, we have to work hard for

21:41

it. We have to save money. And

21:43

yes, we even have to incorporate a bit of

21:45

luck. And if we are lucky and if we

21:47

work hard and we save money, then we can

21:49

buy the truck or the trip or new clothes.

21:52

In fact, I support it. I want you to.

21:55

But if you begin with the idea

21:57

that you deserve certain things, it's very

21:59

likely that you'll find yourself. in financial

22:01

trouble because you'll add more and more

22:03

things to that deserved category without ever

22:05

focusing on the hard work and habits

22:07

that actually let you comfortably afford them.

22:11

One thing that I hear when

22:13

you describe the situation you're in

22:17

is it sounds like you

22:19

both are passengers on

22:23

the ride of life. It

22:27

feels like it. I

22:29

bet it does. You wake up, first

22:31

thing you do, think about bills.

22:34

Go to work, maybe get

22:36

the paycheck. Think that's not

22:38

even going to cover what we need to. Sit

22:41

down every two weeks, talk about money, but it's never a

22:43

positive conversation. It's never, oh, we're going to save this much

22:45

or we're going to do this. Okay,

22:47

we're going to pay this but not that. Then,

22:50

every so often, spend

22:52

a whole bunch to feel good for that.

22:56

Yep. Very

22:59

accurate. Because we're living

23:01

so down

23:05

on ourselves for weeks

23:07

and weeks at a time. I feel

23:09

like we need to have that spending

23:12

spree or whatever have you by

23:16

that pair of shoes or by

23:18

that movie or whatever

23:21

to make us feel good,

23:23

to feel like we're not complete

23:25

failures at life. Do

23:28

you think you're a failure at life? I

23:30

feel a little bit like it right now. Why?

23:33

Why? Just

23:37

financially, I feel like I've

23:39

failed at providing

23:42

for my family, providing for my daughter. I

23:46

hustle at work a lot to

23:48

try and hustle my way up

23:50

the corporate ladder to

23:52

try and make up for my

23:55

lack of financial sense, I guess you'd

23:59

call it. I try

24:01

and do a

24:04

lot of side hustles. I fail at

24:06

them, but I try. But

24:08

I feel like it's my responsibility to

24:10

fix it. Her work

24:13

allows her to do overtime.

24:16

I mean, they're constantly busy. Even

24:19

if I could do overtime, she's usually

24:21

doing overtime. So our daughter

24:23

dances. So I take her to a

24:25

lot of her dance stuff and I

24:28

try and help around the house, make sure

24:30

it stays picked up and dinner gets made

24:32

and everybody gets to

24:35

eat. And with my

24:37

maintenance background, I fix things around

24:39

the house. Well, that's valuable. Right.

24:43

It is. 100 percent. So

24:47

that's why I took on the

24:50

financial side of it. He

24:52

has his value in the

24:55

household things. And I try and

24:57

use my position to do

25:00

what I can to help with the finances. But well,

25:04

I will say I have tried to make changes. It's

25:06

not that I'm not aware that we're not

25:09

working, but it's not working. I'm

25:11

very aware of it. I'm very conscious of

25:13

it. It is more so

25:15

that I've

25:18

tried many different things and

25:21

I always come back to the notebook.

25:24

What else have you tried? The

25:27

Dave Ramsey, we've done tried

25:29

that. That didn't work. Why not?

25:34

We couldn't get past the first step. We

25:36

couldn't save $1,000, which is pathetic, but

25:40

we couldn't save $1,000. Hold on,

25:42

hold on, hold on. Step one, save

25:45

$1,000. What happened? We

25:49

needed the money. I would save $100 and

25:53

something would come up and the money would be needed

25:55

for something, $20 or $50 and

25:57

something else would come up again. could

26:00

never get past that step because I couldn't

26:02

save more than, you know, 100 bucks. If

26:04

that. What

26:06

does that tell you? That

26:12

we're spending

26:14

too much? John, what do you think? Why

26:18

do you think we couldn't save 100 bucks? We

26:21

couldn't say no to things. It

26:24

didn't matter whether it was something we wanted or

26:27

needed. We

26:29

couldn't say no and we would spend

26:32

$100. The way

26:34

you describe your situation is something

26:36

is always happening to you. It's

26:38

coming at you, a bill, an

26:40

expense. But when I dig down

26:42

into it, a lot of it, maybe not

26:44

all of it, but a lot of it

26:47

is we couldn't say no. We couldn't change

26:49

our own behavior. It's not the world. The

26:51

world is going to always throw things your

26:53

way. We couldn't

26:55

change our behavior. You

26:59

notice that? Yes,

27:02

unfortunately. Yes. I

27:05

have a lot of sympathy for people who

27:07

overspend and it can sound

27:09

infuriating to others to hear people overspending

27:12

when they're in obvious financial trouble. But

27:14

one of the reasons I started this

27:16

podcast was that I want you to

27:18

hear the stories underneath the spending. For

27:21

example, Elizabeth said, we're so down

27:23

on ourselves. Sometimes we need to

27:25

have a spending spree to feel

27:28

good. People are not

27:30

robots. When people feel bad,

27:32

we will do almost anything to

27:34

stop that feeling. And

27:36

the reason I can see this is how I

27:38

was raised with my immigrant parents taking

27:41

us to India every few years and

27:43

studying psychology and persuasion. Now,

27:46

because of that, I also believe we

27:49

can make changes. I believe in

27:51

personal responsibility, but I also

27:53

understand why people make irrational decisions.

27:57

We'll be back after these messages. Ever

28:01

since I started my website in

28:03

2004, I promised to

28:05

be honest with you about how money

28:08

actually works. From the best accounts to

28:10

the worst banks, I've always told it

28:12

to you straight. So when

28:14

we started working with sponsors on this podcast,

28:16

I knew that we were going to be

28:18

highly selected. And I want

28:20

to take you behind the scenes of one

28:23

of our partners, Facit, which provides flat fee

28:25

financial planning and what has happened

28:27

with our sponsorship with them. And

28:29

we've had a lot of listeners who have signed

28:31

up with Facit for financial planning. And we reached

28:33

out to a lot of you. We asked you,

28:36

what's working? What do you like? What do you

28:38

not? What would you change? A lot of people

28:40

are extremely happy with Facit service. We

28:42

also heard from some people who said, hey, I

28:44

didn't know exactly what I was signing up for.

28:46

Or there's this one thing I really don't like.

28:49

In each of those cases, I sent that feedback

28:51

directly to Facit and within 24 hours they

28:54

got back to me with what they had

28:56

learned about the situation and what they were

28:58

doing to change it. In one example, the

29:00

founder of Facit got on a call with

29:03

one of our listeners, understood what the situation

29:05

was, and then recommended a different advisor to

29:07

handle the complexity of her portfolio. Now

29:10

I want to say a couple of things

29:12

here. First off, I really appreciate any company

29:14

that goes above and beyond to get things

29:16

right. Second of all, no company

29:19

is ever going to get it completely right,

29:21

but it makes me feel great when I

29:23

can get feedback from you, our listeners, telling

29:26

me what's working, what's not, and then I

29:28

can take it back to our sponsors and

29:30

make sure that they respond. So I appreciate

29:32

Facit and I appreciate all of our sponsors

29:35

for listening to our feedback. Now

29:37

look, not everyone needs a financial advisor, but if

29:39

you do want a second set of eyes on

29:41

your financial plan, I recommend you check out Facit.

29:43

If you decide to sign up, Facit is giving

29:45

my followers an exclusive offer. They're going to waive

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the $250 enrollment fee for new annual members

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and they will give you $500 into

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your brokerage account when you invest $5,000 within your

29:55

first 90 days. to

30:00

learn more. Again, facet.com/for

30:02

me. Sponsored by Facet, Facet

30:04

Wealth Inc. Facet is an SEC registered

30:06

investment advisor headquartered in Baltimore, Maryland. This

30:08

is not an offer to sell securities

30:10

or investment, financial, legal or tax advice.

30:12

Past performance is not a guarantee of

30:14

future performance. Terms and conditions apply. Okay,

30:19

I want to show you something. If you are listening

30:21

to this episode instead of watching it, just

30:24

listen in. Okay, I just

30:26

read and resolved nine emails

30:28

in just a few seconds. I didn't use

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my calendar. Everything happened in seconds without my

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using a standard email service. It's

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like watching someone who's never used a cell phone trying

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there's a keyboard shortcut for everything.

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H, if I see something I don't have time to reply to

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now, IWT listeners get a

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superhuman.com/Ramit. That's superhuman. human.com slash

32:01

Ramit, R-A-M-I-T. Let's

32:06

get back to the show. I

32:08

suspected part of their behavior came from how they grew

32:10

up, so I asked Elizabeth to tell me about her

32:12

childhood. I grew

32:15

up in a very conservative Christian

32:17

family, and I was, I

32:24

rebelled against a lot of the things, and

32:27

didn't end well for me a lot

32:29

of the times. So I

32:31

always felt out of control in my life, like

32:33

I didn't have control over anything. So obviously

32:35

as soon as I

32:37

went to college, I

32:39

immediately got a credit card, and lost control

32:42

of finances. And

32:47

you said it didn't go well for you. No,

32:49

I was constantly in trouble, constantly

32:52

grounded, constantly pushing

32:54

back, constantly fighting, constantly

32:58

being shamed, or

33:00

everything. I

33:03

hate that word. Sorry. It's okay. Let's take as

33:05

much time as you need today. We have plenty

33:07

of time. I'm

33:14

sorry you had to go through this. Nobody,

33:16

no adult, no kid, should

33:18

have to go through that. As

33:21

far as money goes, my

33:23

horrible spending habits, I

33:26

know that I need to do this,

33:28

and I rebel against all rules. So

33:30

I know we need to save, so I spend.

33:34

I know we need to buckle down, and

33:38

do a no-spend month, and

33:42

immediately I can think of five things

33:46

that we need right this second. What

33:48

is that phrase you use to

33:50

explain how you're going to make it all

33:53

work? What do you say? I'll

33:56

make it work. I'll make it work. I'll

33:59

make it work. it work, then

34:03

who do you become? Who are you

34:05

in that scenario where you made it

34:07

all work, despite all, against all odds?

34:10

I'm the hero of my own story. Yes.

34:15

You know. We

34:17

all love to be the hero. But

34:19

in your case, you're the hero of

34:21

a story you've created, where

34:24

the hero only buys one

34:27

more month before

34:30

they have to go back into turmoil again. I

34:36

understand that you speak to

34:39

a therapist. Yeah. I

34:41

would imagine this is one of many

34:43

topics you've talked about. Oh, for

34:46

sure. Okay, good. Good. I'm glad. This is

34:48

exactly the kind of thing that I always

34:50

encourage my guests to go. This is something

34:52

that does not get changed in one conversation.

34:54

So I'm very happy to hear. Right. Thank

34:58

you. Yes, thank you. When

35:00

you were younger, what do you

35:02

remember your parents saying about money?

35:07

We never had enough. When

35:09

I was young, my

35:11

mom was working

35:15

minimum wage job. My dad was still

35:17

in college. And then he

35:19

got a job. Things were looking great.

35:21

And then he was laid off. And I think

35:24

he was laid off for probably two years.

35:27

So that was really hard.

35:29

You know, lights

35:31

would get turned off. We would have to move to

35:33

Grandma's house for a week or two

35:35

if we needed to. We could

35:38

make that whole nine yards for

35:40

a while and then things would get back.

35:43

Can I ask a question? Yeah.

35:45

When the times would get really tough, what

35:48

would your parents say to you about

35:50

money, about the things that were going

35:52

on around you? They

35:55

didn't. They would ignore it very

35:58

much so. How would they

36:00

explain that you don't live in your apartment or

36:02

house anymore in your movie to grandma's? We're

36:05

just going to go visit grandma for a while

36:07

or a couple of weeks. It was just, you

36:09

know, a visit. It wasn't, but

36:11

I was aware enough to know what

36:14

was going on. I knew fully why

36:17

we were, you know, at

36:19

that age, I think it was, I was eight

36:21

or nine. I knew the lights

36:24

weren't on. I knew we didn't have electricity. Wow.

36:28

It wasn't hard to put two and two

36:30

together. You know, when the money came

36:32

in, you got what you got because we could finally

36:34

afford it. So get

36:36

it now or forever hold for peace because who

36:38

knows when that's going to come back. This

36:42

is classic from people who grew up poor. Hurry

36:44

up. Eat what you can when it's

36:47

there. Spend what you can when it's

36:49

there because we don't know what's even going to be

36:51

here tomorrow. Yep. And

36:53

you've carried that with you. Very much

36:55

so. Yeah. You have

36:57

to live in that mentality. Hurry up and get what you

36:59

want now when you have the money because, and

37:02

honestly, that's one of the major

37:04

reasons we're in the position we're in. That's right. That

37:06

was extremely insightful. What I love

37:09

about that example is you

37:11

connected it to your childhood, but

37:13

you also took responsibility for your

37:16

behavior. Oh yeah. I

37:19

spend, we spend.

37:22

That is powerful. Yeah. How

37:25

many people in your family? I

37:28

have two younger sisters. So there's three

37:30

girls and then my parents. Yeah.

37:33

And what general area did you grow up in?

37:37

Indiana at

37:39

a small town. So it's like

37:41

already we're in a community

37:43

where probably money's not really talked about with

37:46

kids. No. All right. And

37:49

then it's religious. Okay. And then there's a

37:51

lot of income instability.

37:53

So one, two, three. All

37:55

right. Yeah. Yeah.

37:57

I said my dad was in college when.

38:00

when I was young and he made

38:03

sure that he got his degree in engineering and

38:05

he wanted to make sure that his family was

38:07

taken care of. My

38:10

mom went back to school in her 30s

38:12

to become a nurse. Wow. So

38:15

they made progress,

38:17

you know, as far

38:19

as financially to

38:23

make sure that they could take care of their family. So

38:25

they were very adamant that I get an education and

38:27

that I get a good job so

38:29

that I could thrive

38:31

later in life. Did you

38:33

end up going to college and graduating? Yes.

38:37

I went to college, I did not graduate. But

38:39

you did not? How many years were you there? I

38:42

was there three years. And

38:46

I didn't get

38:49

as much financial aid as I needed and

38:52

I was going to have to borrow a lot more and I

38:55

didn't want to do that. I also

38:57

discontinued my program at the school that I was

38:59

going to. I

39:01

went to school for a library and

39:04

I don't remember the name

39:06

of it. It's library science basically, but

39:08

for education. So it should be

39:10

a librarian in a school. And

39:13

mind you, this is around 2008. So

39:18

at the time, all of the librarians in

39:20

the schools were being laid off. The

39:23

professor that was teaching the program was

39:25

in her 70s and wanted to retire.

39:29

And so they discontinued the program. So

39:31

I left and I did

39:33

eventually go back online, but

39:35

I am literally one class

39:38

away from graduating. Why

39:40

don't you do it? Because

39:44

I'm in $50,000 worth

39:48

of debt for school and I don't want to go into

39:50

more. For me, it's

39:53

almost like, what's the point? Yeah, I understand.

39:55

You're two sisters. How

39:58

are they with money? Yeah, they're both with money. That

40:00

at it as well. Admins would.

40:03

Probably. Same situation the wherein Living

40:05

paycheck to paycheck lots of credit that

40:07

it about your parents are they with

40:09

many know. Ah,

40:12

they were living paycheck to paycheck for

40:14

very long time and and months of

40:16

credit card that I don't know. I'm

40:18

assuming they're much better off. Now all

40:20

of us are out of the house.

40:23

You know that's kind of changes, You

40:25

know, financials? there. He. Didn't

40:27

have a relationship with them. Ideal

40:29

so we do not talk about money.

40:32

Oh. Have you ever. Mouth

40:35

me as a was.

40:39

When. I

40:42

was getting a year when

40:44

we got engaged. Son and

40:46

I ah my dad told.

40:49

Him. That never to let me get

40:51

a credit card because I'm really bad with money

40:53

and so always use cash. Like

40:55

that was his like preface to whether or not

40:57

he could marry me. With

41:00

this he said. Rain me in

41:02

because I'm so bad it. With

41:04

money that that was. the many jokes

41:07

Would he make a that. Is

41:09

if any of. Know it's

41:12

not. it's. It's harmful,

41:14

but. It's. Honest

41:17

man that money's I

41:19

feel. So.

41:22

No I am afraid of the

41:24

other side to they do the

41:26

surveys of allies self sabotage. I

41:29

can things when great and I'm

41:31

doing what I'm supposed to do

41:33

and lead nice self sabotage. And

41:36

a buses are ones where do you

41:38

do it. Why

41:41

do I saw Salvador's. That's

41:44

not something I've. Completely

41:46

figured out. but I'm assuming.

41:49

I just don't feel that they this about ways

41:51

of of. I would assume. That's

41:54

probably true, so I just. right?

41:57

Yeah, because if a

41:59

sad Maybe you just don't care that

42:01

much to change. I've

42:05

fought with myself about that. Thought

42:07

maybe I'm just comfortable living in

42:09

this cycle because

42:11

it's my comfort

42:14

zone. It may suck, but it's

42:16

comfortable. But I know

42:18

that that's not where I need to

42:21

stay. I want to reiterate

42:23

how happy I am that Elizabeth is seeing a

42:25

therapist. Something that I

42:27

want to de-stigmatize. I get

42:29

the chance to spend a few hours with

42:31

couples here, but sometimes there's a lot of

42:33

work that needs to be done with a

42:36

therapist. I'm really glad that Elizabeth is doing

42:38

that. Elizabeth mentioned

42:40

self-sabotage, which happens with her

42:42

finances and I would be willing to bet

42:44

almost certainly other parts of her life. Imagine

42:48

if you grew up in a chaotic

42:50

childhood. Imagine if you

42:52

came to expect chaos, almost like a

42:54

familiar sweatshirt. If

42:57

things started going well, suddenly

42:59

it would feel weird, unfamiliar,

43:01

even uncomfortable. And what

43:03

do a lot of people do in that situation? They

43:06

self-sabotage. They're used

43:08

to a lifetime of chaos or when

43:10

it relates to money, money scarcity. And

43:12

so when they finally see money in

43:14

their savings account, they quickly spend

43:17

it. Because who knows if it'll be

43:19

here tomorrow. Chaos. You

43:21

can see how deep this goes. We'll

43:24

be right back. A

43:26

few months ago on this show, you heard

43:28

a couple who had $649 in

43:30

monthly subscriptions. Well

43:35

I recently got an email from them five months

43:37

after we spoke and here's what they told. Hi,

43:40

Ramit. Here's a follow up on how

43:42

we are kicking ass since our podcast.

43:45

We canceled Jeff's whole life insurance policy and

43:47

got a check for $20,000. And

43:51

we use Rocket Money to cancel our

43:53

unwanted subscriptions saving us at least $75

43:55

a month or $920 per

43:57

year. Using

44:00

the CSP, I now know I will

44:02

save enough and I have my fixed

44:04

costs managed so that

44:06

I can enjoy my monthly

44:08

guilt-free spending. I love it because

44:10

the couples I work with will sometimes

44:12

send specific feedback like this, which makes

44:14

my job totally worth it. Other times,

44:16

they might send vague feedback where it's

44:18

not clear if they're actually gonna make

44:21

a change. Now I get

44:23

it, it's hard to make changes. That is

44:25

why we are here on this podcast. But

44:27

if you wanna make even a small improvement

44:29

in your finances, canceling your unwanted

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subscriptions is one of the easiest places to

44:33

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45:25

Now listen to Jonathan describe his childhood.

45:29

Well, growing up, you weren't allowed to have a job. Your

45:31

job was the farm, going

45:34

to school. I

45:36

was born and raised

45:38

on a farm. Midwest, right?

45:42

Yep, Indiana. There

45:44

was always something to do on the farm. My

45:48

dad worked and still to

45:50

this day works 12 to

45:52

14 hours days. And

45:55

I mean, he just, he's

45:57

a workhorse. to

46:00

do stuff. I mean, that was the time that

46:02

we got stuff done on the farm with my

46:04

dad. And we also

46:06

took care of my grandparents farm further

46:09

north. So we would go up there

46:11

on Sundays and do farm stuff up

46:13

there. They had an old

46:16

wood burning furnace. So in the

46:18

wintertime, we'd go up there and we'd chop trees for

46:22

an entire Sunday. Did

46:24

you like it looking back? I enjoyed

46:26

it. Yeah. It was just

46:28

time spent with my dad and that. And

46:31

as far as money went, my parents never talked

46:33

about money. We were poor

46:35

in the sense of having money

46:38

because it was just my dad working and my mom

46:40

stayed home and took care of, I have

46:43

four siblings. And at

46:45

some point in time, she ended up going back

46:47

to work. She was a medical transcriptionist. But

46:50

I mean, as

46:53

kids, you ask for things and it

46:55

was constantly no. What did they say after that?

47:00

We can't afford it. You're just not getting it.

47:02

Oh, okay. It was just a

47:04

hard no. We were poor, but

47:07

there was still food on the table. We still had clothes.

47:11

We had roof over our head. I mean,

47:16

my parents had debt. I mean, I knew they

47:19

had tons of debt because they had five kids

47:22

to put through school, buy clothes

47:24

for and all of that. I

47:26

knew we had debt, but

47:28

I never knew how much. Did

47:31

they help you with your college loans? Yes,

47:35

they did. All of them. How

47:38

much was that? All part? Well, I

47:40

went to a technical school.

47:42

I'd say probably about $25,000 maybe. Let's

47:47

just assume that all your siblings were

47:49

the same ballpark. That's $125,000

47:51

in debt. Your

47:54

elderly parents have helped out

47:56

with and are helping out. That's a lot, right? Yes,

47:59

yes. help the kids

48:01

with whatever they need, no matter

48:03

what. They're so giving of themselves.

48:08

They watch our kids for free. They

48:11

provide us with meat from the farm

48:13

for free. They will pay

48:15

truck payments when we need

48:17

truck payments paid. They will pay whatever we,

48:20

they'll pay for our gas if we don't

48:22

have gas. To

48:24

them, that's their way of showing

48:26

love is whatever they can give

48:28

of themselves, they

48:30

will give. And they have given

48:32

us an immense amount

48:34

of just everything in the

48:37

context of free childcare

48:40

for one is an

48:42

insane financial help. If we didn't have that

48:44

free childcare, we would be in worse position

48:47

than we already are in because

48:49

childcare is insane. Yeah.

48:51

His family, his parents are just

48:54

all about whatever they can do

48:57

for family, they will do. And it's been very

48:59

much of a giant blessing

49:01

for us financially as well

49:03

as, you know. Okay.

49:06

I love hearing that. I think from a family

49:08

perspective, they sound like lovely people. So you

49:11

sound lucky to have them in

49:13

your life. Awesome. We are very lucky. Very

49:15

lucky. I wanted to move to

49:18

the present day and try to understand exactly where

49:20

all of their money was going. I asked Elizabeth

49:22

to give me a tour of their house. Here

49:25

we are in her closet. What do you

49:27

notice? It's literally just

49:29

a hole in the wall, but it's

49:31

jam packed. Go ahead and go in tight on that.

49:33

Let's look at these clothes. Describe them for us, would

49:35

you? I mean,

49:37

nothing very exciting. And this is

49:44

me being, I

49:47

didn't grow up by a lot of options

49:49

when it came to clothes because we

49:51

were poor. So

49:54

clothes are my

49:57

outlet, like where I go crazy

49:59

because I didn't have a lot of options

50:02

as a bigger girl as

50:04

well. So now there's

50:06

a store in my area that carries clothes

50:09

that I actually like to wear that fit

50:11

me. And

50:13

so I overspend there.

50:16

Her clothes are, that's her pitfall.

50:19

That's usually her go to. The

50:21

other day she had a target run and

50:24

she likes to shop

50:26

the clearance stuff. I

50:29

think it adds up faster

50:31

than she realizes at times. Generally

50:34

if we have to do grocery shopping of

50:37

any kind or have to run to the

50:39

store, I do it because I

50:43

go in, get what we need and walk

50:45

out. If Elizabeth

50:47

goes in, she

50:50

thinks of 50 other

50:53

things that we could use, but we don't

50:55

necessarily need in the moment or

50:58

she runs across

51:00

something that she likes that

51:03

we don't need, but it's grabbed

51:06

her attention enough to want it and

51:11

gets it. What do you think about

51:13

that Elizabeth?

51:16

It's accurate. I

51:18

do like the rush of

51:20

finding that good deal.

51:24

I do like to buy clothes for my daughter.

51:26

That's probably where the other big portion of it

51:29

is, clothes for my daughter. What

51:33

do you think of that to cost you? I don't

51:36

mean financially. Probably

51:40

trust. My husband doesn't trust me to go to

51:42

the store on

51:44

my own without coming back with... Five

51:48

other things that we didn't

51:50

need, but I wanted or I wanted

51:53

for the family. The

51:56

way he described it, it sounded like he treated you

51:58

like a child. Yeah, a

52:00

little bit. Do you think you could change it? Yes,

52:05

I have tried to change it in the past. I

52:09

do try to... Sorry,

52:11

not could you try to change it? Could you

52:13

change it? Yes,

52:16

I could change it. If

52:18

you keep going the way you've been

52:20

going with your finances, where

52:23

do you end up? Two years, a

52:25

year from now, two years, five years

52:27

from now? Yeah. In the same position and

52:30

or worse than we are now. You

52:33

have a house, you have a roof. I think

52:35

I saw a TV, piano, got kids

52:39

toys and clothes. What's

52:41

so bad about that? Nothing's

52:48

bad about it. But are

52:50

we guaranteed to keep the house? Are

52:53

we guaranteed to keep all these nice things? As

52:56

bills are paid or not

52:58

paid, there's no guarantee where we

53:02

get to keep the house. We could

53:04

end up living back with his

53:06

or my parents. At

53:08

this point of the conversation, I was getting

53:11

frustrated. The stakes are dire.

53:13

There are bad habits, deep family

53:15

histories, a daughter who's being spoiled,

53:17

debt. And even with all

53:19

this, I was getting very little engagement

53:21

from them. And remember, they called me.

53:25

Do you both realize that you cannot get out of this with

53:27

just one of you doing it? Yeah.

53:31

Because if you did, both of you would

53:34

be engaged in this conversation. John, you'd be asking

53:36

me questions. The two of you be talking back

53:38

and forth. What's

53:40

up with the dynamic here? I'm curious. I

53:49

don't know. Why are you disengaged with money?

53:52

I never really had much

53:57

money. So I never

53:59

really had to. to deal

54:02

with it. I went from having

54:04

a minimum wage job, living with my parents straight

54:07

into us being married. And

54:11

it's all new

54:14

territory for me. And

54:19

I'm just trying to gain footing where I

54:21

can, but

54:24

it all seems like it moves so fast. I'm

54:28

trying to play catch up with the

54:30

things that are going on. John,

54:33

it's been 13 years. And

54:39

I was disengaged for most of them.

54:45

What happens if nothing changes, John? We

54:48

stay stuck in the cycle we're in. Yeah.

54:50

And what happens with your daughter? She

54:55

learns the same cycle. Cause she

54:57

asks us all the time. She'll say, mommy, do

54:59

we have money for this? Or mommy, do we have money

55:01

for that? She

55:03

knows. She already knows what we're doing. So

55:13

the cycle repeats. And

55:17

what do you think happens as she gets older? Just

55:20

continue to get more expensive. Or

55:23

she'll be asked for more things. Fine. What will you two

55:25

be doing when she asks for more expensive stuff? Probably

55:29

saying yes. That's

55:31

honest. I agree. Making it

55:33

work. Making it work. Okay. Making

55:37

it work. She goes off to

55:39

college. Let's say she's in her mid twenties.

55:41

What's happening in her life financially speaking? She's

55:45

going to get a credit card cause she's going to

55:47

want what she wants. And it's

55:49

going to start the process all over again. And

55:52

when she has an eight year old daughter, she

55:55

teaches it to her children. She's

55:57

going to continue the cycle. doing

56:00

it? No, not at all.

56:03

It's really hard, but it can be done.

56:07

I'm not gonna give up on you. Let's do it.

56:10

Yeah. Well, as

56:12

you can tell, we have just scratched the surface. In

56:15

part two of this conversation next week,

56:17

I'm gonna go much deeper on their

56:19

numbers. And I think you will

56:21

be surprised by what you find. Thanks

56:29

for listening to I Will Teach You To

56:32

Be Rich. I'm Rameet Sethi. Please follow the

56:34

show on Apple, Spotify, or

56:36

wherever you listen to podcasts. If

56:39

you haven't read I Will Teach You To Be

56:41

Rich, my book, pick up a

56:43

copy. You can get it at any bookstore

56:45

or any library, and it will show you

56:48

the specific tactics for how to

56:50

build the I Will Teach You To Be Rich system

56:53

into your personal finances.